Bet Big Against the iPad
Sep 1st 2011 5:29PM
Updated Sep 1st 2011 5:30PM
Is Apple (NAS: AAPL) about to get cored?
Yesterday, I made the case for why Amazon.com (NAS: AMZN) poses a credible threat to Apple and its empire -- if only it can avoid the mistakes that Hewlett-Packard (NYS: HPQ) made with the TouchPad. While some Fools have expressed skepticism regarding Amazon's commitment to building a tablet PC, and taking on the Cupertino Colossus ... Amazon seems pretty darn sure of itself.
Amazon's initial move against its rival is expected to come in October, and to take the form of a seven-inch tablet built on contract by Taiwan's Quanta Computer. Already, however, Amazon is planning ahead to ramp up, and launch a full-blown 10.1-inch tablet that will eclipse the iPad -- sizewise at least -- in 2012. Amazon's also apparently enlisting an ally in this battle (or turncoat, depending on your perspective). According to tech sleuth Digitimes, Foxconn Electronics will be tapped to build the 10-inch tablet. As Foxconn is already the builder for both Apple's well-received iPad and Amazon's even more popular Kindle, this could spell trouble for Apple. Foxconn has the chops to make this product a success.
A comp too far?
Granted, some pundits are already criticizing Amazon's move, saying that it could undermine sales of its seven-inch tablet if consumers decide to hold off and buy the bigger version. Already, though, I've begun speaking with potential buyers eager to see the new product, who say they'd actually prefer the smaller, more portable tablet. Then, if Amazon finds a way to offer better daylight visibility, they'll jump on it.
More strategically, I also think Amazon's right to make its commitment to tablet production clear. In beginning plans for mass production of a larger tablet before the first generation has even seen the light of day, Amazon is throwing down a gauntlet. It's telling potential customers and app developers, "Hey, we're not going to pull an HP and run away from Apple, tails tucked. And we're not going to accept a drubbing like Dell (NAS: DELL) and Research In Motion (NAS: RIMM) , either." Amazon's telling us that even if sales don't take off immediately, it's in this for the long haul, and will do what it takes to get up to scale on this product -- and knock King Apple right off his LCD throne.
At the time this article was published Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 440 out of more than 180,000 members.The Motley Fool owns shares of Apple and Research In Motion. Motley Fool newsletter services have recommended buying shares of Dell, Amazon.com, and Apple, as well as creating a bull call spread position in Apple. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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